Archive for September, 2020

Catastrophe risk modeller RMS has estimated that total U.S. insurance and reinsurance industry losses from Hurricane Sally will be between $2 billion and $3.5 billion.

The cyclical nature of the Florida property insurance market is just one of the challenges facing those operating there, with issues around claims litigation, assignment of benefits (AOB) and its exposure to hurricanes and severe weather all making for a marketplace that is difficult to navigate.

Darren Redhead, chief executive of Lancashire Capital Management, acknowledges that four years in a row of trapped collateral, on the back of major natural catastrophes in 2017, 2018 and 2019 and, latterly, the uncertainty stemming from COVID-related claims, does pose a challenge.

Analysts at Morgan Stanley said that pricing momentum across insurance and reinsurance may extend beyond 2021, as a return to profitability remains a priority for reinsurers, while insurance-linked securities (ILS) specialists focus on delivering sustainable returns to investors.

Broking giant Aon said that reinsurance companies included in its Aon’s Reinsurance Aggregate won’t cover their cost of capital in 2020, after loss ratios rose on the COVID-19 pandemic.

The alignment inherent in the collateralised reinsurance sidecar vehicles that Swiss Re operates has helped the company to attract fresh ILS capital even during difficult times, the firms CEO Christian Mumenthaler told us.

Universal Insurance Holdings, the Florida headquartered and expansive primary insurance carrier, has announced “full retention events” for both hurricane Isaias and hurricane Sally in the third-quarter of 2020, suggesting its reinsurance has been tapped for both storms.

The development and growth of an insurance-linked securities (ILS) market in Asia can only be a benefit to local insurance and reinsurance carriers, as well as those operating regionally, as the capital markets capacity can help them expand their ability to underwrite and diversify capacity sources, rating agency Fitch explained recently.

Reinsurance Group of America (RGA) has explored a variety of ways of transferring mortality risks related to pandemics off its books, including capital markets backed instruments such as catastrophe bonds.

When it comes to building a portfolio of insurance-linked securities (ILS) and reinsurance linked investments, there is more to quality and return potential than simply following models, according to Chin Liu of Amundi Pioneer.